The rupee (INR) remained flat on Tuesday as it closed at 82.70 against the dollar (USD). However, over the past week, it has seen a sharp fall against the dollar and lost nearly 1 per cent. Major part of the depreciation occurred towards the end of last week because of a rally in the greenback.

Better jobs numbers in the US triggered an up move in the dollar. Also, the foreign flows have been on the negative side. The net FPI (Foreign Portfolio Investors) outflow over the last week, essentially in February so far, is at $202 million. This also weighed on the domestic currency. The crude oil prices, which fell last week, did not provide support for the rupee.

As it stands, the bias is bearish for the rupee but the sell-off might slow this week. Here’s an analysis based on charts.

Charts

The rupee, which was banking on the support at 81.80, slipped below this level and witnessed a quick fall. By closing at 82.70, the Indian currency has brought itself close to the all-time low of 83.2925. However, the sell-off might slow this week. Although we may not see a strong recovery from here, the rupee might stay within 82.15 and 83 this week.

The dollar index (DXY) bounced off 101 last week and is now hovering around 103.60. Notably, this is a hurdle and so, we might see DXY softening a bit from here, probably to 102.50. This can aid the rupee inch up towards 82.15. The dollar index can turn positive only if it can breach the barrier at 105.

Outlook

Although the rupee has seen a decline in the recent sessions, the selling pressure might wane. The local unit might stay flat for sometime before establishing the next leg of trend. One should keep an eye on the dollar index as a corrective move in it might help the rupee moving up to 82.15 this week.

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